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Abstract

The current economic climate has caused decreases in value for many types of industrial and commercial properties. Taxing-authority assessors consider these current market conditions in their property assessments. In particular, assessors consider the impact of current market conditions in the application of the cost approach for industrial and commercial property valuation. First, this discussion summarizes the cost approach to the property tax valuation of industrial and commercial property with an emphasis on the various types of obsolescence that are recognized in a cost approach analysis. Second, this discussion presents the practical procedures that either a taxpayer corporation or a taxing-authority assessor can use to recognize the existence of property obsolescence. Third, this discussion considers practical procedures for analyzing economic obsolescence independently from an income approach analysis. And, fourth, this discussion suggests practical procedures to categorize the various types of property obsolescence.